Celebrity death and taxes - What’s the message for all of us?
What lessons can we learn from the stories behind Robin Williams and Phillip Seymour Hoffman estates? I think we can all agree it was tragic to lose two very creative and talented men in 2014. Their passing will leave not only a void in their family’s lives, but also in the lives of many, who respected and appreciated what they did in the entertainment business.
Since I am in the life insurance business, I was naturally curious to learn how they left the state of their financial affairs. I was wondering what messages we could take away from each of their situations? I don’t think it matters how much you have in assets, but rather, what precautions you take to protect as much of it as you can, for the benefit of those you leave behind.
I read an interesting article in Forbes titled “What’s next for Robin Williams’ family and estate” and learned about both of these men and their unique situations. Hoffman didn’t believe in using trusts. He didn’t want to see his children become trust fund babies. Since he didn’t set up at least a revocable living trust (he only had a will), all of his assets will go into probate. His girlfriend and children will be saddled with a huge estate tax bill. Robin Williams on the other hand, had set up at least 2 trusts and maybe more that haven’t been disclosed. Because of that, some of his assets will not go through probate and instead will be managed by trustees according to the terms of the trust. As for any life insurance they had, as long as there is a named beneficiary other than the estate and in Robin William’s case, as long as the policy was in-force for more than 2 years (can’t be contested due to suicide), those proceeds will not flow through probate either.
Let’s talk about trusts. There are all kinds of trusts, and if used correctly, they can go a long way to protecting assets, reducing estate taxes and allowing the person creating the trust to determine the how, the when, they why and to whom the assets should go. Trusts also don’t pass through probate like wills do. This provides privacy (probate records are public while trusts are not) and yes, protection against unforeseen outcomes, if the assets are managed through probate.
This topic is complicated and this blog can’t even begin to scratch the surface. I simply hoped to pique your interest to learn more.
About the author: Michele Cleary has been in the business for over 35 years and holds a CLTC designation. She believes that life insurance can give you and your family peace of mind, especially when you have other things to worry about. Michele now has 4 grown children and knows that proper planning is essential. You can reach her at 1-800-651-1953 or MCleary@Pivot.com.